Reassessment under Income Tax Act requires tangible material to substantiate claims of income escaping assessment, ensuring compliance with procedural requirements.

JUDGMENT :

ARINDAM SINHA, J.

1. Dr. Sharma, learned advocate appears on behalf of petitioner-assessee. He submits, impugned is, inter alia, order dated 28^th March, 2023 of the Assessing Officer (AO) made under clause (d) in section 148-A, Income Tax Act, 1961. Purported basis for the order is information had by revenue from inside portal under Risk Management System (RMS) that during financial year 2015-16, relevant to assessment year 2016-17, his client had made huge deposits in his bank account. The amount is alleged to be Rs.1,31,54,000/-.

2. He points out from said impugned order itself that revenue issued letter dated 1^st March, 2023 to Punjab National Bank, Jajpur road branch for furnishing statement of bank account in respect of his client. Reply of the bank, extracted in said impugned order, clearly said that there was no such bank account connected to PAN no.AAGHS2891R.

3. He draws attention to the counter filed, paragraph 10. He submits, therein stands mentioned information had with revenue that his client carries on business under PAN no.AGCPS2177E. The show cause notice based on aforesaid PAN no.AAGHS2891R is therefore completely without basis. He seeks interference for quashing impugned order.

4. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on behalf of revenue and submits, the impugned order does not warrant interference. Petitioner will have adequate opportunity in the reassessment to ventilate his grievance. So has been said by the Supreme Court in order dated 2^nd September, 2022 in petition for Special Leave to Appeal (C) no.14823/2022 ( Anshul Jain v. PCIT ). Text of the order is reproduced below.

“What is challenged before the High Court was the re-opening notice under Section 148A (d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the re-assessment proceedings.

Under the circumstances, the High Court has rightly dismissed the writ petition.

No interference of this Court is called for.

The present Special Leave Petition stands dismissed.

Pending applications stand disposed of.”

5. Before issuing the show cause notice, as appears from impugned order, revenue had enquired of the bank in relation to petitioner’s PAN identity. The bank was clear in confirming there is no account with the branch connected to the PAN identity. Obviously revenue is not on the right track.

6. We are clear in our mind that proceeding for reassessment needs now to be initiated on issuance of show cause, reply thereto, order thereon and thereafter issuance of notice under section 148. The preceding requirements on inserted by amendment section 148-A must be complied with by revenue before launching the reassessment proceeding. Considering that a reassessment can be initiated only on tangible material leading to reason of belief that income has escaped assessment, in the facts and circumstances of this case, petitioner has been able to demonstrate that there exists no material, let alone tangible material.

7. Needless to say on quashing of the impugned order made under section 148-A (d) there is no basis for subsequent also impugned notice under section 148, issued to petitioner. Same is also quashed and set aside.

8. The writ petition is allowed and disposed of.